Should Amazon buy Macy’s?
Months after it was first reported that Macy’s might be on the block, no deal to acquire the department store chain has been made. And yet there’s no lack of speculation as analysts have suggested Macy’s and Amazon.com, for example, would be a suitable match.
As a backdrop, it was reported in February that industry sources had been approached about a potential sale of Macy’s. Hudson’s Bay Company, which owns its namesake chain as well as Lord & Taylor and Saks Fifth Avenue, was reportedly the primary suitor. Subsequent reports claimed no deal could be made as Hudson’s Bay was unable to secure the necessary financing.
For its part, Amazon has made acquisitions of other e-tailers in the past and the company has reportedly held internal discussions about pursuing Whole Foods. To date, Amazon has held pat.
So what makes some analysts believe Amazon should go after Macy’s?
As reported by Business Insider, Oliver Chen, a Cowen & Co. analyst, published a note in February that laid out potential benefits including Macy’s giving Amazon first-party access to new apparel brands it doesn’t currently sell itself. Amazon’s predictive analytics technology would benefit Macy’s in product selection and pricing.
“Amazon needs better brands, a more curated assortment, a physical place to return items, and customers could use help with ensuring fit — Macy’s would also give Amazon greater credibility in curation and fashion authority,” wrote Mr. Chen.
Zhang offered a similar assessment on Seeking Alpha. Macy’s market capitalization is currently at 2010 levels, making it relatively cheap to acquire.
“Think about the shipping cost savings for Amazon when consumers can just walk into a mall to pick up their online purchases in the same day,” wrote Mr. Zhang. “In addition, Amazon should be able to considerably consolidate physical space needed for its own use and sell or rent out the rest to offset the cost of the acquisition.”
- Amazon should buy Macy’s, analysts say – Cincinnati Business Courier
- Amazon Should Buy Macy’s To Kick Start Its Offline Ambition – Seeking Alpha
- The Case for why Amazon should buy Macy’s – Business Insider
- Amazon Said to Mull Whole Foods Bid Before Jana Stepped In – Bloomberg
- Is Macy’s about to be sold? – RetailWire
- Macy’s is merging with Hudson’s Bay? Not so fast – USA Today
DISCUSSION QUESTIONS: Do you think an Amazon.com acquisition of Macy’s makes business sense? What do you think would be the benefits and drawbacks of an Amazon/Macy’s deal?